Trade flows between Ecuador and the European Union (EU) increased 3.8% since the Multi-Party Trade Agreement entered into force in 2017.
According to data provided by the EU Commerce section in Ecuador, bilateral exchanges grew 21% that year. Ecuador’s exports increased 12% compared to 2016, while imports from the EU rose by 25%.
For 2018, the bilateral trade flow increased 3.1%. Exports grew by only 2% due to a reduction in EU sales of major export products such as bananas, shrimp and roses. Imports from the EU increased 11%.
The situation in 2019 was different: trade registered a marginal increase of just 0.16%. Ecuador’s exports to the EU fell 1.57%, while its imports grew 2.46%.
Despite this, says Immaculate Montero Luque, head of the EU Trade Section in the country, Ecuador continues to maintain a trade surplus of 604 million euros ($ 658 million) in 2019.
The trade agreement allowed, in the first place, to strengthen exports of traditional products such as bananas, shrimp, cocoa, tuna and flowers.
Mónica Maldonado, executive director of the Ecuadorian Chamber of Tuna Industry and Processors (Ceipa), says that if there was no agreement, the export of tuna to the EU should pay a 24% tariff. “With the agreement , the tariff preferences we already had were renewed, which helped us stay in that market. Getting there is not easy, special conditions are required, ”says Maldonado.
According to Ceipa data, Ecuador produces around 500,000 tons per year in pre-frozen loins and canned tuna in glass and sheath, which represents about $ 1.3 billion. About 60% is exported to the EU.
The alliance also helped diversify Ecuadorian exports . In 2017, 200 new products entered the EU and in 2018 around 50. Some of these are papaya juices and concentrates , fruit and vegetable derivatives (powders), fish fats and oils, soluble coffee, food supplements, strapping wood, sweet corn, peanut, brandy and canned herring.
Apart from the traditional export products , in 2019 the non-traditional fruits such as pineapple, avocado and papaya were well received in the European market .
Daniel Legarda, executive president of the Ecuadorian Federation of Exporters , points out that currently 612 products are exported to the EU. There are 1,181 exporting companies to that market, 65% are MSMEs. In total, $ 3,108 million were exported in 2019.
On the other hand, the European products that are most in demand in Ecuador are capital goods, such as mechanical machinery, followed by pharmaceuticals, vehicles, electrical machinery and trams / railways.
According to Montero, the International Monetary Fund projects a global growth of Ecuadorian exports of 2.5% and a drop in imports of -2.1% by 2020.
“However, it is expected that the reforms that Ecuador is undertaking , both in the tax field and with the entrepreneurship law , among others, and the opening of markets, positively influence the strengthening of foreign trade and the diversification of supply exportable, ”explains Montero.
In the opinion of the EU representative, the Ecuadorian industry is taking advantage of the benefits of the trade agreement. Some of them are micro, small and medium enterprises . The latter increased their exported products from 360 to 480 between 2016 and 2018.
Montero adds that the EU works with financing of 10 million euros ($ 10.8) granted to the National Government and the private sector , such as the Ecuadorian Federation of Exporters, which allowed them to support about 300 MSMEs throughout the country. For example, the internationalization of at least 20 projects with associative components in the country has been achieved with products such as: quinoa, panela, flowers, cocoa, banana, vegetables, peanuts, wood, among others.
Since the commercial agreement entered into force 99.7% of Ecuadorian agricultural products and 100% of fishery or industrial products have enjoyed access to the EU market, duty free, except bananas.
This 2020 the Ecuadorian banana will have the same tariff of 75 euros ($ 81) per ton, as well as its neighboring countries, which allows it to compete in similar conditions in the European bloc with the rest of producing and exporting countries of this product.
On the other hand, the tariff reduction for industrial products from the EU will continue in this 2020. The agreement establishes five years of relief for wood, textiles, clothing, medicines and machinery , such as valves, crushers, scales, dishwashers and pressing machines .
Seven years for paintings, personal care products, bathroom accessories, porcelain and ceramics and vehicles . And 10 years for footwear, tires , articles of plastic, glass , among others. In the case of vehicles, for example, 5% is reduced every year for seven years.
In Legarda’s opinion, in order to take advantage of the trade agreement with the EU , the country’s internal competitiveness must be improved, as well as the promotion of Ecuadorian products in all possible European niches .